Draft simplifies SOE stake bidding for foreigners

Hanoi (VNS/VNA) - The State
Bank of Vietnam has drafted a regulation which would create favourable
conditions for foreign investors to join in the process of State-owned
enterprises’ (SOEs) privatisation and capital divestment.

The draft regulation, if approved, would be added to Circular 32/2013/TT-NHNN,
dated December 26, 2013, restricting the use of foreign currencies in Vietnam.

The draft will allow non-resident foreign investors to use foreign currencies
to pay deposits when bidding for stakes in SOEs during their privatisation or
capital divestment.

If the foreign investors do not win in the bidding, the deposits will be
transferred abroad after deducting the costs (if any) they must pay for
submitting a bid.

If a foreigner investor were to win the bidding, the investment procedures
would be conducted following the established regulations about foreign
currencies.

The central bank said the draft regulation would make it quicker and easier for
foreign investors to buy stakes in SOEs undergoing privatisation or capital
divestment.

There are currently no regulations allowing non-resident foreign investors to
pay bid deposits in foreign currencies, meaning foreign investors must get
approval for the Governor of the State Bank of Vietnam on a case-by-case basis.

The central bank expects the regulation to encourage the participation of
foreign investors in the SOE privatisation and capital divestment process.

Privatisation results are expected to miss targets set for this year;
therefore, the Government has targeted attracting foreign investors to
accelerate the process.

The
central bank also drafted a regulation setting lighter punishments for illegal
transactions of foreign currencies.

This
came after 38-year-old Nguyen Ca Re in Ninh Kieu district, Can Tho city was
fined 90 million VND for exchanging 100 USD at a gold store – not an official
channel for currency exchange. The punishment for Re was said to be too heavy
for such a small individual violation.

The draft proposes setting the lightest punishments at merely a warning or 10-20
million VND (435-870 USD), far lower than the previous fine of 80-100 million
VND.

The central bank said Decree 96/2014/NĐ-CP, which set the original punishment,
was outdated after four years in effect, adding that several punishments were
no longer appropriate.

According to lawyer Nguyen Duc Chanh from the HCM City Bar Association,
introducing lighter punishments for illegal currency transactions was
reasonable as several punishments were too severe compared to the seriousness
of violations.

Chanh said the draft should categorise violations into different levels, as the
punishment for exchanging 1 USD should be smaller than for exchanging 1,000 USD.

Financial and banking expert Nguyen Tri Hieu said it was necessary to quantify
the damage of the violations to the economy to identify the appropriate
punishment.

The
draft decree also added punishments to casino operation violations related to
the listing of currency exchanges and the opening and use of accounts in
foreign countries without the approval of the central bank.-VNS/VNA